Paul Denton said the wider building society sector was relieved when Ms Reeves decided against cutting the £20,000 tax-free allowance on the cash ISA. This was despite widespread speculation the Chancellor would cut the allowance to encourage more people to invest in stocks and shares, with those in favour believing too much money is held in savings accounts that does little to help the economy.
Mr Denton told The Herald Business Monthly HQ savings are “not just there for the individual savers, but savings in cash accounts are effectively the backbone for the funding of mortgages as well.
“So there was a broader macroeconomic aspect of banking that she was threatening. I do understand the Government’s desire that, as an economy, we need to take a bit more risk and invest. I do understand that I really do.
“I think our pension funds have become more regulated and, by result, more risk averse. I think as a population we have become more risk averse, so I do understand that there is a lot of money tied up and, as a Chancellor, she is trying to stimulate the economy.
“I really get that and I am not here to be on top of Government policy because there is never an easy answer, and this is not an easy fix.”
Although Ms Reeves has ruled out a cut to the cash ISA allowance for now, it appears the measure has not been ruled out permanently. It is likely the subject will return to the agenda in the run-up to the Autumn Budget as Ms Reeves comes under sustained pressure to improve the public finances.
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“While future changes to cash ISAs can’t be ruled out, we welcome the Chancellor’s decision to consult rather than act hastily,” Mr Denton said.
“The united voice of the mutual sector has made clear that cash ISAs are far from idle funds; they help people build financial resilience, save for a first home, and manage retirement, while also supporting mortgage lending. They are vital
both for consumers and for the
UK economy.
“Growth matters but it must be pursued with care, ensuring investment opportunities are encouraged while protecting those for whom investing isn’t suitable.
“Safeguarding cash ISAs will give savers the confidence to make sound, long-term financial decisions.”
Mr Denton believes slashing the cash ISA allowance would “disproportionately” impact older savers.
He said: “ISAs are great savings accounts for all savings customers because of the very nature of the tax-free aspect. But younger people or people at the lower social economic groups do not put £20,000 aside every year. That is not realistic.
“So, it is a disproportionate benefit for older customers. We [Scottish Building Society] are representative of the UK population as a whole, and the vast majority of wealth in the UK is held by the over-60s.
“It has been for many years because people build up their wealth over the years and their outgoings typically reduce when they become empty-nesters, and their incomes grow towards the end of their careers. So, it was always going to have a disproportionate impact on the savings of the elderly population.
“But they are the very customers that we tell to stop taking as much risk. If you go and speak to any investment advisor or pension advisor as you approach retirement or if you are in retirement, they tell you to reduce your risk profile so you have the security of the cash being there for you for your retirement income.
“So, there was there was a little bit of a contradiction flowing through that it would have impacted elderly customers.
“Elderly customers should not be taking risk as they have their money. But as a building society we are delighted she [Rachel Reeves] has listened in the interim.”
That saving for the future has become a lot more difficult for large parts of the population was underlined in a recent report published by the Scottish Building Society, a historic mutual with roots stretching back to 1848.
The Society’s savings barometer for 2025, published in June, found nearly half of the survey’s 1,000 respondents reported a decrease in their savings over the previous year.
Three-quarters said the current economic climate, characterised by the ongoing cost of living crisis and stagnant wages, was negatively impacting their finances.
The Scottish Building Society notes that savings rates within its own accounts are in growth, however.
The mutual’s most recent accounts show that retail saving balances increased to £588.3 million in the year to January 31 from £490.9m the year before. Most people who save with the society are aged 50 and over.
Mr Denton signalled satisfaction at the society’s improving savings rates but acknowledged the difficulty many people face in setting money aside for the future.
He said: “We have outperformed the industry. Our savings are up approximately 15% over the course of the past 12 months, which is a tremendous performance against the industry. So from a brand [perspective] Scottish Building Society has done particularly well in attracting savings and I think there are a number of reasons for that.
“We have worked hard to increase the brand awareness. We do pay attractive rates compared to the industry as a whole.
“And I think more and more customers are starting to appreciate the mutual message rather than a shareholder-led environment.
“That message is starting to flow through and obviously the Government, aside from their desire around savings and investments have a broader remit to encourage mutual and cooperative ownership going forward.
“So Scottish Building Society has done well relative to its brand, relative to being a mutual and relative to the rates that we’ve chosen to pay over that period. But clearly from the research that we have done across Scotland, that has not been fully representative of the typical Scottish consumer at the moment who has found it difficult to save over the course of the past 12 months.
“There are a variety of reasons why they’ve either abandoned their savings goals, or they they’ve not been able to put aside as much as they would like in many cases and had to dip into their savings just to manage day-to-day life.”
Just as it has become a lot more difficult for many people to save in the current climate, it has become harder for younger people to be able to afford a mortgage to get on to the housing ladder.
The Scottish Building Society has seen the average age of its mortgage members gradually rise.
Mr Denton said: “What we have seen is that the average age of the first-time buyer used to be late 20s and is now mid-30s.
“People need a longer period of time to save for a deposit.”